6 Facts to Know about Getting a Business Line of Credit |
Posted: December 12, 2017 |
Are you a business owner looking to make an update in your establishment? Are you searching for a form of financing that provides you with quick access to the cash you need? Do you have reason to believe that a business line of credit could be the right answer? While there are many benefits of relying on a business line of credit, you can’t move forward until you learn more about the financial options available to you. You don’t want to make the mistake of securing a business line of credit, just to find that something else – such as a loan – would have been better for your company. With all this in mind, let’s examine some of the many details that can help you decide if this is right for your business. 1. The Definition of a Business Line of Credit Generally speaking, a business line of credit is similar to a credit card. With this, you gain access to revolving capital that you can use and payoff as you see fit. The primary benefit of a business line of credit, as opposed to a credit card, is direct access to cash, as well as a lower APR (in most cases). Tip: it always makes sense to compare a credit card and business line of credit to ensure that you’re making the right decision for your company. 2. Qualifying for a Business Line of Credit It’s important to note that qualifications can and will vary from one lender to the next. However, there are two basic requirements that most banks look for:
While other details may come into play during the application process, it’s good to keep these two in mind upfront. If you have a new business, for instance, you may not qualify for a line of credit. 3. It’s Fast There are times when you need money fast, such as to deal with an emergency or to fund expansion. With a small business loan, you could find yourself waiting several weeks (or longer) for an approval. Conversely, a business line of credit approval can come in as little as one day. 4. The Benefits There is no way of knowing if a business line of credit is the answer to your problems until you fully examine the pros and cons, while also weighing them against your other options. Here are 5 of the top benefits:
These are the types of benefits that get so many small business owners excited about what a line of credit can do for them. 5.The Drawbacks Unfortunately, there are some drawbacks associated with a business line of credit. These may not be enough to scare you away, but you should be aware of them nonetheless. Here are three drawbacks to keep in mind:
Fortunately, some (or all) of these potential drawbacks may have no impact on you. 6. The Questions You Should Ask the Lender Much the same as a small business loan, you’ll find that there are hundreds of lenders willing to do business with you. Since you can only choose one, you need to know how to narrow your list and make the right decision. Here are some questions for any lender you’re considering:
By asking these questions upfront, you’ll find it much easier to move forward in a confident manner when the time comes. Conclusion These are the types of details that can help you decide if a business line of credit is right for your company. With an open mind and plenty of knowledge, you can decide if this financial tool can have a positive impact on your business in the future. Do you have any experience with a business line of credit? Have you been able to use this to your advantage? Share your personal experience in the comment section below.
|
||||||||||||||||||||||||||||||||||||||||||
|